Oil prices rose on Tuesday amid tight supplies and speculation over what $100 oil could do to the economy.
West Texas Intermediate (CL=F) settled at $90.39 per barrel on Tuesday while Brent also closed fractionally higher at $93.96 per barrel.
Oil prices have steadily climbed since late June amid output cuts imposed by OPEC+ and unilateral production curbs from Saudi Arabia and export restrictions from Russia. Some refineries in the Persian Gulf are expected to further tighten supply by consuming more regional crude to refine diesel.
JPMorgan economists pointed out late last week that if supply cuts continue, the price of Brent crude could jump to as high as $120 per barrel.
"We estimate that if this were to happen in the coming weeks and, were attributable entirely to supply cuts, the global economy would slow to a near stall next quarter," wrote JPMorgan's head of economic research Bruce Kasman and his team.
JPMorgan economists expect global gross domestic product (GDP) to be impacted if oil prices stay elevated.
“On net, we estimate the last moves in the price of oil, if sustained, would damp annualized global GDP growth by 0.5%-point over two quarters."
However, Kasman forecasts crude prices will drop back to $86 per barrel next quarter, in which case an oil shock "will fade quickly."
Earlier this week, Goldman Sachs economists said higher oil prices are a "manageable" headwind for the US economy, though the firm lowered its GDP forecast fractionally.
"We estimate energy price changes will lower GDP growth by 0.3% annualized and consumption growth by 0.5% annualized over the next two quarters,” wrote Goldman's chief economist Jan Hatzius to investors in a note published Sunday.
Recent increases in oil prices have driven up the price of gasoline and other refined products. The national average for gasoline on Tuesday lowered to $3.84, four pennies off its 2023 highs.
Rising energy prices also increase concerns of slowing demand amid price hikes for goods and services.
"In the US, the pass-through of crude prices has been felt strongly in jet fuel prices, which have soared more than 40% on the Gulf Coast since early July," said the JPMorgan note.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.